Do rural banks matter? Evidence from the Indian social banking experiment.

Topic :

Between nationalisation in 1969 and liberalisation in 1992, the Indian central bank took control of the placement of banks as a means of advancing social objectives. During this period more than 50,000 new branches were built primarily in unbanked, rural locations. This represented a seven-fold increase in the proportion of rural locations which were banked. This paper evaluates the impact of this experiment on rural development. The authors conclude that the policy did lead to a reduction in rural poverty and inequality directly via the growth of the non-farm sector and indirectly through agricultural wages.

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